Strategies For Investors Who Live Outside The US

Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cashflow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they build incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons and get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome back to Multifamily Rock Stars. So as you guys know, this is where we interview people that are just flat-out crushing it in our business. And we show you guys the inside scoop as to how multifamily investors are just creating massive success in their businesses and in their lives. And as always, I’ve got my co-host, who’s also the director of our Massive Action Team for our Warrior group, Mark Nagy. Hey, Mark.

Mark
Hey, Rod. Happy to be here. Good to see a couple of familiar faces. We’ve got on the guest for the podcast this year that I met last year, so happy to get into it.

Rod
Love it. Yeah. You know, we just came off a huge boot camp this weekend, virtual boot camp. We had 930 registrants, and I’m just finally recovered, literally. It’s only been a few days and I’m finally getting, you know like I think I’m about 85 % at this point. But yeah, you guys are going to really get value from the two gentlemen we’re interviewing today. The first one is Vinicius Ramos, who goes by Vini, and then Jose Ignacio, who we call Nacho. So you got Vini and Nacho. Welcome to the show, guys.

Jose
Thank you, Mark. Thank you, Rod. Thanks for everything.

Vini
A pleasure to be here.

Rod
Absolutely. Now, I know you guys are in about 50 million in assets, 620 doors. Let’s see, I think you joined the Warrior group back in May of last year. I know you’ve done deals with Warriors and stuff like that, but, you know, why don’t you take a minute and just give us a little bit of your background in the business and kind of bring us current? You know, just a better overview than I just did.

Jose
Thanks. Yeah. In my case, I’ve been in commercial real estate for quite a lot of time in Mexico, for 17 years. So three years ago, we decided to go into the US market. We just decided it would be better to be over there. So, yeah, we started two or three years ago, buy a couple of things, and right now where we are.

Rod
Yeah. Wow. Okay.

Vini
And about me, well, I’m from Brazil. Actually, I was in corporate. I was working for a water technology company. That took me to the US. I lived at first in the Bay Area in California, and then I moved to Texas. And I just started, you know, researching a lot of US real estate, the fundamentals of multifamily. I just found out there’s a phenomenal avenue for generating you know, wealth, equity, and adding value. So, I just fell in love with that, partnered with Nacho and JP, and we started the business.

Rod
Fantastic. I know you guys are Texas Valley Group, right?

Vini
Right.

Rod
And you’re killing it. And I know that one of the things that– well, in fact, let me back up for a second because I want to talk about the foreign investors because you know, moving into this economic environment that we’re moving into, I think finding money is going to be harder than finding deals in short order. I think things are about to get much uglier. I just saw an article today that they’re expecting 800,000 layoffs. I didn’t capture the period of time. I was just shocked by the number. You know, I think we’re going to have some pain, but with pain comes opportunity for what we’re doing here. And you moved to Texas. Is that one of the markets that you’re investing in?

Jose
Yeah, that’s the market we’re investing in right now. We started– sell piece in a couple of deals in Austin and in Denver. Then we started to go active and we are in San Antonio, Houston, and the McAllen area because a lot of our LPs, or most of them, the investors are from Mexico, right, and from Brazil and from abroad. So mostly, they like the Texas market because of the obvious things that you have told in the program and because they can be related to Texas more than other states in the US, right?

Rod
Well, that makes sense. That makes sense. It used to be Mexico, didn’t it? At one point, I think. There is that. No, I love it. Yeah, we’ve got assets in San Antonio, Houston, in Dallas as well. I wish I had something in Austin. That market is insane. But, yeah. So, Mark, go ahead and ask a question. And then, well– yeah.

Mark
Tell us about your guys’ strategy in that. You know, what has been your strategy for investing out of the country? How have you guys gone about building relationships? And then what are the roles that you guys play? Is it just purely raising money? Are there other roles that you guys play? What’s the team looked like since you guys are out of the country?

Rod
Yeah. Of course, they’re not investing out of the country. They’re bringing investors into the United States [inaudible]

Mark
Well, they live out of the country. Let me correct that. Yes.

Rod
Okay. All right. Well, he did. Nacho does. Now, Vini is in Texas.

Vini
Yeah, we’re in between. We commute a lot between Texas and Mexico.

Rod
Oh, you do? Okay, got it.

Vini
So your question. So when we started the business, we wanted to bring, you know, partners, investors that wanted to tap into US real estate, but they didn’t know how. They were very wary on how to do– there are any fiscal implications, structure.

Rod
Sure.

Vini
Who would really they rely on, say, well, this is a good market because there’s growth, because there’s migration coming and people want to come to live here, right? You know San Antonio is one of the biggest cities, actually the 7th city in Texas. What are the fundamentals of San Antonio? What’s in the bush that we can actually translate to them and say, well, this is a good business. You know, we get very aligned with them. We try to just understand that it’s very– just explain. Right? Give them good information and partner with that because that’s what we do. We try to make a partnership. Yeah, that’s how we started.

Jose
Yeah. As well as bring them value and try to educate them about passive investing in the US. When we arrived in the US, when I arrived at the Warrior program in Denver last year, we were like the new kids on the block from outsiders, from– bringing money from other countries. But I think we got a good niche in the Mexican and Brazilian and from other places, LPs. And that’s the way we do it. Networking, being in the program, going to meetups. We commute a lot like Vini said, just to be in the right room with the right people. Right?

Rod
Now, even in Latin America as well, you’re getting into rooms down there to connect with potential investors, yes?

Vini
Correct.

Jose
Yeah, exactly.

Rod
Okay, got it. Now, so let me ask you this, kind of structural question. How do you structure the foreign investment in a US domestic deal? What is your mechanism? Do you set up a domestic LLC? Do they invest directly? How do you accomplish that because there are some hurdles?

Vini
We create a structure.

Rod
Okay.

Vini
So when we wanted to do that, we went to a specialist that was, you know, giving us all the advisory, like bilateral and international business, you know, trade between countries. And they proposed a structure that’s set up in the US. There are a couple of LPs. It’s called Blockers, and that makes them– they can somehow be protected in terms of state tax and all these issues that you know, for foreign investors, they have to be very aware.

Rod
Mindful.

Vini
Mindful. Yes, correct. Or some of them have structures in the US. So they create their own structure. And that’s pretty good for them because it makes it very efficient for them in terms of, you know, distribution, stuff like that.

Rod
So they set up their own structure in some cases.

Vini
They could.

Rod
Some of these investors are a little more sophisticated.

Vini
Correct, sir.

Jose
Exactly.

Rod
Okay. Well, I know there’s a lot of money in Latin America. I mean, I’ve heard that for decades. A lot of money, a lot of– you know, that’s why the Miami condo market went crazy because a lot of Latin Americans bought condos there. You know, I think you guys are in a really great position to raise money. And as I said, I think in the coming economic climate, raising money is going to be the bigger deal than finding the deals. And so, you know, I think you’re in the cat bird’s seat in that regard. Awesome.

Vini
Correct.

Jose
Thank you.

Mark
Are the people you’re working with generally excited that you can bring them to the US? I know nothing about real estate in Mexico, but are the people– are they excited that you guys can provide a vehicle to get into deals in Texas and the US? What’s kind of the general feeling on that with your investors?

Jose
Real estate in Mexico is great. But it has the caveats of being in the Mexican market. So people really like to be in the US, taking care of their money, US dollars, not in Mexican pesos. You know, the exchange rate may be a liability for them. Right now with inflation in the real estate world, it’s like the natural yield for– a hedge for the money you have in the US.

Rod
Sure.

Jose
Yeah. They’re really, really into investing in real assets like the multifamily value add, what we do.

Rod
So the advantages are, you know, similar to the United States. Get your money in so that you’re not getting killed by inflation, you know. And I would guess that the stability of the US real estate market is also a big draw. Are there any benefits for them getting the money out of Mexico and into the United States? Any other caveats or things that you do to influence people to invest in the United States besides the stability, you know, the profit potential, and the hedge against inflation, is there anything else that you bring up in a conversation?

Vini
I like to highlight something, Rod. For them, the type of investors that look for this type of investment in the US, they try to get away a little bit of the volatility of these markets that sometimes you get some swings between left and right. You know, Mexico just changed its administration. Brazil just went left, you know, a couple of months ago. So this resonates with them and says, you know what, I’m going to get my money to a safer harbor.

Rod
It’s a little scary, honestly, what happened in Brazil. We don’t have to go down that political rabbit hole, but it sure looked like that got stolen to me. You know, I’m just saying. We won’t go and talk about what happened here in the States because I got very strong feelings there as well. But still, you know, yeah, you see it there– I mean, it was right there and it was on all over social media for sure. And as a kind of neophyte, you know, we were just in Tulum, Tiffy and I have been to Cancun several times. And, you know, I know that there’s some– you know, you see in the headlines about crime and things like that that happen. Do people want to move up here or is it just an investment?

Jose
People do want to move. Some of them want to move.

Rod
Okay.

Jose
This is not a vehicle to get a visa, no other thing.

Rod
Right.

Jose
But they do want to move. At least they want to move their money.

Rod
Right. Yeah.

Jose
Then they can check out if they can do it. Right?

Rod
Well, so one last question. I’m stealing all the questions here, Mark, sorry. What is your avatar in Latin America? What do they do for a living? Describe your most common investor’s personality, work, what they do, age even, and all of that. What’s your avatar look like? If you know what that expression means, right?

Jose
Yeah. Our avatar is business people that they’re not the richest man in the room, high net worth individuals, they do have some accounts in the US, but not that much. Usually, they don’t have a structure. And we’re slowly moving towards the upper part of the pyramid with the family offices and those guys.

Rod
Oh, good.

Jose
As well as we’re starting to try to educate people about passive investing like I just said.

Rod
Sure.

Jose
If they have 100K or 200K, they can still send it to the US because for Mexicans and for Brazilians, it’s not that easy to find someone like Vini said to rely on. To have confidence in them. Our first LPs were the ones that are having our LPs since 15 years ago. So those were easy to tell them to go come to the US.

Rod
Sure. Because you had a track record. Sure.

Jose
Exactly. But for the new ones, we have to work on them. Yeah.

Rod
Yeah.

Mark
I’m glad we went down that rabbit hole. And I asked that question because I’ve been hearing that a lot from Canadian Warriors as well that they’re having issues with money and inflation and all kinds of stuff. So if you’re in Canada and listening, all that stuff that they just said applies to you guys as well, trying to bring money in here. But one thing I do want to ask you guys is I know you did have some deals before you guys came on the team. Why did you guys decide to join the Warrior program instead of just you know continuing to do things on your own as you have been?

Rod
Good question.

Jose
Yeah, we had quite some deals. The thing is, we weren’t getting the deals that we loved to go, right? We weren’t in the right room. So we all started eating all these podcasts and books. And then we just found out about this podcast, and we thought, hey, they have the Warrior program and other programs from other guys that have podcasts. And we just decided, we text you, Mark, so we can ask about the Texas Warriors and everything, and we just take a leap of faith and take action and we subscribe to the program. Yes.

Rod
And it’s been all downhill since then, right?

Jose
Yeah, like you said.

Vini
No, I think the number one thing was the network. I think a network is so powerful and couldn’t be more true that your net worth is your network or the other way around.

Rod
Definitely in our business.

Vini
It’s so important, you know, the pre-existing relationships. I can’t emphasize that more. If someone is trying to get more traction or so, it’s so important.

Rod
It’s a pretty cool group, isn’t it? The Warrior community?

Jose
Yeah, we have a great time as well. After all the conferences we know of, yeah, we had fun.

Rod
We have a blast. We’ve got one coming up. I hope you guys can come in March here in Sarasota.

Jose
Yeah, in Sarasota, right?

Rod
Yeah. It’ll be 300 Warriors here. But by the way, if you’re listening and you’re interested in the Warrior program, text the word “crush” to “72345”. Again, that’s the word “crush”, so we can help you freaking crush it in business and in life, to “72345”. That’s how you apply. And we don’t take everybody and that’s a real statement, but you know, you check us out, we check you out. And if it makes sense, we will bring you in. But it is an incredible group. Just incredible. I’m really looking forward to the event in March. But yeah, so as a foreign– are you naturalized in the United States, either of you or are you– how do you– I’m getting really technical here, but, you know, are you able to sign on debt or did you just align with domestic partners to make the deals happen? Do you bring money to someone else’s deal? Do you do your own deal? I’m just curious about the logistics.

Vini
You can do but it gets a little bit complicated in a sense.

Rod
Okay.

Vini
But there are some requirements that are additional, but if you can meet those requirements, it’s possible, right?

Rod
To do the debt in your own name as a foreign national.

Vini
Correct.

Rod
Okay.

Vini
We’re being warranters in our deals. You know, we put real skin in the game.

Rod
Right.

Vini
But on top of that, what you said, partner with locals. It is just really, really important.

Rod
Well, for you guys, it’s got to be easier. I mean, in the Warrior community, there’s dozens of sponsors, possibilities, and teams, and so on and so forth. So if you’re bringing money, you know, you’re very valuable to anybody, you know, certainly in our ecosystem and even outside our ecosystem. So is that kind of what you’ve been doing is bringing that component with your foreign national money?

Jose
Yeah, but we do find the deal.

Rod
Okay.

Jose
We do everything. Then we find a KP, we find somebody from the Warriors.

Rod
So you put it all together?

Jose
Exactly. We do like the one-stop shop for it. Yeah.

Rod
Fantastic. Well, you know, what words of wisdom would you share with somebody listening that either has done a little bit of this stuff, maybe done some single-family, they know that they need to do more, they need to create, you know, wealth for their family and they just haven’t gone crazy with it yet, or maybe they haven’t done it at all. What would you tell someone like that that hasn’t taken action?

Vini
I have two advice. One is partner with someone. Even if it’s like you’re going to do part of the work, but you’re not going to do the whole work but you get involved. That learning is worth a lot of money, a lot of money. Right? The second one is network. What I just said a little ago, is whenever you start networking and you start putting time because I believe, you know, I’m sure that your time and your intention is what drives you, right? And so if you put time into it, things will start happening. So I think these would be the two advice, at least in my experience, those were super, super useful.

Rod
Those are good. Those are good. Mark, or—

Jose
Yeah. I think like you always say take action or be intentional in what you do. Network. Just be around people that are doing this thing. Even if you don’t have any deals, go here. Yeah, take action.

Rod
Meet people, take action. Love it. Love it.

Mark
And I have a quick follow-up on that as well because I know the market is changing a lot right now. Interest rates are up and down, sellers are being stubborn, buyers are being stubborn. Right? There’s a lot of stuff going on with the market right now. What are you guys doing in terms of action? If anything is different, if it’s the same, that’s great as well. But what are you guys changing or doing anything differently as the market is kind of changing at the moment? Are you focusing more on relationships and less on finding deals right now? What have you guys changed, if anything at all?

Jose
Our underwritings are different now from what they used to be, right?

Rod
Yeah. More conservative.

Jose
Exactly. Really conservative. Putting there that the rate is going to be at least the same or higher in a couple of years if you have to go to a refi or something like that. And as well as networking because people are doing the same thing that you are doing. And if you team up, I think that’s a better place to be.

Rod
No question. It’s divide and conquer. Anything to add, Vini?

Vini
Reducing a little bit, maybe the LTV so you can, you know, your debt service will be more conservative.

Rod
Yeah. I mean, a lot of banks are requiring that now, but, you know, you should be doing it as well. I mean, some of these guys that got bridged debt at 80% loan to cost, loan to value, we’re going to see pain. We’re going to see opportunity, really, but they’re going to be in trouble. In fact, we talked to a guy in San Antonio with an asset that his reserves to his bridged lender went from 8,000 to 80,000 a month on a San Antonio asset. Another guy in Texas, I forgot where it was. I think it was Houston. Interest rate went from 3% to 6%. I mean, on a multimillion-dollar asset, that is a big freaking deal. Now, let me ask you kind of a sidebar question here if you don’t– oh, go ahead. You were about to say something.

Vini
I was just finishing on the portfolio that we already owned. So we’re being very conservative on the reserves. So we’re getting reserves, you know, being very conservative on the tenants that we’re making lease contracts. So that’s kind of just to finish that up you know while we already have invested, we’re trying to take care that we’re going to go in a smooth path.

Jose
As well as the fixed rate, right? So I think that’s–

Rod
Fixed interest rate, yeah, absolutely. Yeah. The reserves are super important. We typically do six months of expenses as a minimum. And, you know, if things really get ugly, we may slow down the CapEx and hold on to a little bit of that money just to play it safe because you know, it’s all about longevity here and survival in some cases. If it gets things flat-line or vacancies increase, which is inevitable to happen in some fashion. But let me ask you kind of a personal question. Do you guys have families, kids?

Vini
Yes, sir.

Jose
Yes.

Rod
Yeah. You’re both nodding. You’re nodding. Okay, so how do you manage that time? Because I know in Latin America, family is big. In fact, bigger than the United States. A big deal. And so how do you manage being that father and husband and family man, father– yeah, all of that, and still push forward to the success that you guys are experiencing and are going to continue to experience? How do you manage all that?

Jose
I think being in the real estate world, you have a little bit more of managing your time, right? So you can manage a couple of hours in the morning, maybe in the afternoon. Of course, in our case, we have to commute a lot to the US, maybe twice a month, maybe four days. So those days are tough but when we come back, in my case, we like to be with them. I have three kids and a lovely wife, so they are the reason why to do this. We just have to balance both streams, right?

Rod
Right. And you can. You know, you manage your time and you do it effectively. But that’s where I was going. And I just want to let people know that have a W-2 job, that hae a family, that have kids, you can do this on the side and still be a great husband and a great father or wife and mother. Would you agree with me? Yes?

Jose
Yeah.

Vini
Yeah. Absolutely. I also have three kids and a wife. You know, I think it’s just like, what’s more important than growing the next generation, right? So if you’re there for your kids, if you’re with them, you know, coaching them in difficult times? It’s so important. So I think you have to make a lot of time in and prioritize. I would say prioritize, right? What’s important? Where’s your time more valuable? I would say that.

Rod
Yeah, for sure. And one of the things, by the way, guys, if you’re listening and you haven’t done my goal-setting workshop, I just did it again on January 2nd of this year. And at the end of it, I do my weekly planning process to help you really manage your time effectively. It’s how I manage two very large companies at the same time. And if you go to “RodsLinks.com”, “RodsLinks.com”, at the bottom is my goal-setting workshop. There’s a guide you can download. I’m not going to try to sell you anything. Just go do it. People spend more freaking time planning a birthday party than they do designing their lives. This is designing your life. And, you know, have your kids do it if they’re over ten years old. Have your spouse do it. It’s very, very powerful to really design your life. Bottom line. Well, listen, guys, I really appreciate you coming on the show. It’s great to see you again. I’m looking forward to seeing you in March at the Warrior event. And keep crushing it, my friends. Keep crushing it.

Jose
Thank you very much. Like you just said, the goal-setting for the year is really important. For sure, we’ll see you in Florida. Thanks, Rod. Thanks, Mark. Thanks for everything you’re doing, for us, our family, and our business. We’re just glad to be in the program and in this episode.

Rod
Thank you. Wonderful.

Vini
Thanks, Rod. This is just starting. Bye

Mark
Thanks, guys.

Rod
Okay, thanks, guys. Nice job.

Outro
So one other quick thing. We encounter so many people that are frankly frustrated. You know, they’re looking in the mirror and they’re frustrated that they haven’t been able to escape the rat race. They haven’t been able to build cash flow to the point where they’re able to have financial and time freedom with their families. And maybe they see other people buying real estate and creating incredible cash flow and they think, well, it’s just scary. Buying apartments is intimidating. And I get it. See, that’s why we created our Warrior Mentorship Program. They’re our coaching students and they’ve had extraordinary results. My students, I’ve been teaching about five years, and they own upwards of 140,000 units now that we know of, right? And we feel like it’s just getting going. Now, we’re looking to grow this group and really take it to the next level and honestly believe that the greatest transfer of wealth could be upon us right now with this current economic environment. Everything’s going on sale. So we’re looking for people who want to follow a proven framework, really like a blueprint or a map, literally step by step. And then they’re able to leverage our systems and our incredible network to raise money and equity, to find deals and close those deals and build partnerships, really nationwide. So if you’re interested in finding out more about how you can become more in our incredible network and take advantage of the unbelievable opportunities that are upon us, you can apply to my Warrior Mentorship Program by texting the word “CRUSH” to “72345”, or you can go to “MentorWithRod.com” and what we’ll do is we’ll set up a call so you can check us out and we can check you out and see if it’s a fit. Now, again, you can go to “MentorWithRod.com” or text the word “CRUSH” to “72345” to apply, and we will speak soon.